Pontiac school budget deficit soars to $24M

PONTIAC -- The budget deficit for Pontiac school district has increased to more than $24 million, more than double what it was two years ago.

As a result, the Pontiac school district is in jeopardy of having a Michigan Department of Education review team order the cuts.

Apparently, expenditures were made for personnel that the board was unaware of and that took the district over budget.

The board learned of the deficit in audits done after interim Superintendent Jon Brown took over in late summer.

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Board President Damon Dorkins said Wednesday in a statement that the board went to the state on Nov. 1 and proposed a plan.

The state indicated they want the board to prepare a plan that would be viable. Once prepared state officials will review it and determine whether it meets state requirements.

If the district isn't able to do that, the state will send in a review team, which would then make the cuts and the district would go to a consent agenda, which means the board would have to approve those cuts.

As long as the plan is followed, "The district would not immediately go to an emergency manager," Dorkins said in the statement.

Brown's plan is to be presented to the board at the 5:30 p.m. Monday board meeting. It is expected the state will require the district to make the cuts necessary to come out of deficit by June 2014, as originally planned.

Among the reasons for the dramatic increase in deficit is that 77 teachers employed under a federal grant continued to be paid after the grant ran out. In addition, more substitutes were hired in various departments in the district than budgeted for.

In reaction, the board passed a resolution to end the practice and to ban any further grants that would require reimbursement.

"The board is going to make sure our children are educated. If there are cuts, they will not be cuts that hurt the children," the Dorkins statement said.

As of June 2009, just after half the schools were closed and a new superintendent -- Thomas Maridada II -- had taken over, the deficit was at $11.7 million and the district was operating under deficit reduction plan as required by the state.

The district first went into deficit in 2008, when it was reported as $10 million then by interim Supt. Linda Paramore. She immediately notified the state and began the process of a deficit elimination plan.

The high school and middle schools were merged and several elementary schools were closed as one way to reduce costs.

Immediately after Maridada became superintendent in 2009, a forensic audit was done to determine whether there had been any criminal activity involving funds. And although mismanagement of funds was documented over the previous two to four years, no criminal activity was cited and no charges were ever made.

Over the next two years new programs and niche schools were initiated and efforts to increase student achievement were intensified under Maridada's administration.

And things were looking up. In June of this year, the Pontiac Board of Education was told by an interim finance director that the deficit had been reduced by another $1.3 million and that the district would come out of deficit in 2013-14 with a positive fund balance of $1.13 million. Maridada resigned in June to take a position in Washington D.C.

"Mr. Brown did a good job," Trustee Gill Garrett said, explaining that Brown has said since finding the deficit, "I don't want to overspend. We need to pump the brakes."

Dorkins and Garrett were upset that the deficit climbed so high even after the board had set stricter rules for financial reporting to trustees after the forensic audit. Garrett alleged some expenditures over the past two years were made without board approval, for example, for special education services.

"That's why I think boards have to be more proactive," said Garrett, who has been accused of "micromanaging" at times because of his inquires into expenditures. His term expires at the end of December and he did not run for reelection this year.

The board also authorized Brown to launch an investigation into some specific expenditures carried out over the past two years. One administrator was put on leave in connection with that investigation. No information has been released publicly in that matter, Garrett said.

"I am really proud of the board, I really am," said Garrett, "For the board to say enough is enough and really start delving into it. We don't care who it is we want some financial reimbursement for our kids."

Jan Ellis, spokeswoman for Michael Flanagan, superintendent of the Michigan Department of Education, said only, "They will have to revise their DEP (deficit elimination plan) and they will have until Dec. 6 to submit the revisions."

Garrett said he doesn't think the new niche schools, partnerships and programs will end because of the deficit.

"The programs are in place and our teachers and principals had a heavy load of professional development ... so I don't think we will lose after they are so much into it.

"I don't think the quality of education will be harmed. We are still keeping those partnerships with Rochester College, Baker College, Michigan State University, University of Michigan, Cranbrook and Oakland Community College. The district is also looking into the possibility of having more teacher interns in the classrooms.

"The current administration has been listening to all open models. There are no sacred cows," Garrett said.